Santa Monica’s social media darling, Snap Inc., took a beating on Wall Street, with shares cratering 13% after the company waved a red flag about rocky times ahead. The plunge came late Tuesday, April 29, 2025, when Snap dropped its first-quarter earnings, revealing a solid performance but a grim outlook that left analysts and investors rattled.
The company, which runs the Snapchat app, reported revenue of $1.36 billion for the quarter ending March 31, edging out Wall Street’s $1.35 billion expectation. Its net loss shrank to $140 million, a sharp improvement from last year’s $330 million shortfall. Daily active users climbed 9% to 460 million, just above the 459 million Snap had projected, while monthly users hit a milestone at 900 million. The ad business, Snap’s bread and butter, showed muscle, with a 60% surge in total advertisers and direct-response ads—those nudging users to click or buy—hitting a record 75% of ad revenue. Snapchat+, the subscription service, grew to 15 million paid users, up 59% from a year ago.
But the good news stopped there. Snap refused to give a revenue forecast for the second quarter, citing “macroeconomic uncertainties” that could kneecap its ad business. In a letter to shareholders, the company admitted it’s already feeling “headwinds” early this quarter, with some advertisers pulling back due to changes in trade policies, like tweaks to the de minimis exemption that lets low-value imports dodge tariffs. CFO Derek Andersen, on the earnings call, didn’t sugarcoat it: a chunk of advertisers are tightening their belts, spooked by potential cost hikes from new trade rules.
The no-guidance move wasn’t just a dodge—it was a gut punch. Wall Street hates uncertainty, and Snap’s silence sent shares spiraling from $8.64 at close to around $7.50 in after-hours trading. Analysts pounced. Cantor Fitzgerald slashed its price target to $7, citing those same macro headwinds. Susquehanna dropped its target to $8, keeping a neutral stance, while BMO Capital Markets trimmed its to $13 but held an outperform rating, betting on Snap’s ad platform and AI investments. Barclays, BofA Securities, and Goldman Sachs also dialed back their targets, reflecting a broader unease about where Snap’s headed.
Snap did offer one crumb: it expects 468 million daily active users in Q2, thanks to better ad tools and content engagement driven by heavy spending on machine learning and AI. Its My AI feature saw a 55% jump in daily users year-over-year. The company also cut its full-year operating expense target by $50 million, now pegged at $2.65 billion to $2.7 billion, signaling a tighter ship.
Still, the market’s verdict was brutal. Snap’s stock, already a rollercoaster, had been up 3% before the report but erased those gains and then some. The company’s reliance on advertising—75% of it from direct-response campaigns—makes it vulnerable to economic swings and policy shifts. With no clear path laid out for Q2, investors bolted, leaving Snap to navigate a stormy quarter with no map.